1
Exhibit 99(e)
STATEMENT OF FINANCIAL POSITION
TILDEN MINING COMPANY (A JOINT VENTURE)
December 31
1993 1992
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 116,325 $ 15,574
Receivable from associates:
Tilden Magnetite Partnership -0- 296,500
Advance adjustment - Note A -0- -0-
------------ ------------
-0- 296,500
Inventories - Note A:
Iron ore concentrates 2,950,425 3,528,022
Supplies 1,232,118 568,098
Fluxstone 454,063 619,805
------------- ------------
4,636,606 4,715,925
------------- ------------
TOTAL CURRENT ASSETS 4,752,931 5,027,999
PROPERTIES - Note A:
Land 2,844,737 2,844,737
Plant and equipment 549,459,673 551,271,698
Allowance for depreciation (282,243,073) (270,486,869)
------------- -------------
TOTAL PROPERTIES 270,061,337 283,629,566
OTHER ASSETS
Advance adjustment - Specific tax 1,420,877 1,562,216
------------- -------------
TOTAL OTHER ASSETS 1,420,877 1,562,216
------------- -------------
TOTAL ASSETS $276,235,145 $290,219,781
============= =============
75
2
December 31
1993 1992
------------ ------------
LIABILITIES AND ASSOCIATES' ACCOUNT
CURRENT LIABILITIES
The Cleveland-Cliffs Iron Company:
Royalties payable $ 2,802,542 $ 447,395
Accounts payable 68,944 14,372
------------- ------------
2,871,486 461,767
Payables to associates:
Tilden Magnetite Partnership 2,777 -0-
Working Capital Adjustment - Note A 834,236 3,981,506
Trade accounts payable 241,531 267,126
State and local taxes 1,444,352 1,065,955
Other current liabilities 13,900 15,600
------------- ------------
TOTAL CURRENT LIABILITIES 5,408,282 5,791,954
LONG-TERM OBLIGATIONS
Specific tax 765,526 798,261
------------- ------------
TOTAL LONG-TERM OBLIGATIONS 765,526 798,261
ASSOCIATES' ACCOUNT 270,061,337 283,629,566
COMMITMENTS - Note D
------------- -------------
TOTAL LIABILITIES AND ASSOCIATES' ACCOUNT $276,235,145 $290,219,781
============= =============
<FN>
See notes to financial statements.
76
3
STATEMENT OF COSTS AND EXPENSES CHARGED TO ASSOCIATES
TILDEN MINING COMPANY (A JOINT VENTURE)
Year Ended December 31
1993 1992 1991
------------- ------------- -------------
COSTS AND EXPENSES CHARGED TO
ASSOCIATES - Note C
Cost of producing pellets and
other operating costs $ 77,110,203 $ 51,406,680 $ 20,890,382
Depreciation 13,547,941 13,699,766 14,185,955
Charges from The Cleveland-Cliffs
Iron Company:
Royalty 8,410,456 5,659,592 2,463,448
Management fee 1,517,664 953,660 388,266
------------- ------------- --------------
9,928,120 6,613,252 2,851,714
Development and stripping 7,162,173 3,786,290 1,847,234
State and local taxes 1,918,963 1,391,537 820,879
Research 660,146 264,963 111,346
Miscellaneous (income) expense-net (99,459) 15,032 (417,265)
-------------- ------------- --------------
TOTAL COSTS AND EXPENSES
CHARGED TO ASSOCIATES $ 110,228,087 $ 77,177,520 $ 40,290,245
============== ============= ==============
<FN>
See notes to financial statements.
77
4
STATEMENT OF ASSOCIATES' ACCOUNT
TILDEN MINING COMPANY (A JOINT VENTURE)
Year Ended December 31
1993 1992 1991
------------- ------------- -------------
Balance as of January 1 $ 283,629,566 $ 297,351,518 $ 311,348,338
Associates' contribution:
Contribution 97,504,006 67,443,629 29,157,532
Advance adjustment - Note A -0- -0- 62,383
Working capital adjustment - Note A (834,236) (3,981,506) (2,923,348)
-------------- -------------- --------------
Total Associates' Contribution 96,669,770 63,462,123 26,296,567
Associates' withdrawal:
Cost and expenses charged
to associates (110,228,087) (77,177,520) (40,290,245)
Other (9,912) (6,555) (3,142)
-------------- -------------- --------------
Total Associates' Withdrawal (110,237,999) (77,184,075) (40,293,387)
-------------- -------------- --------------
Balance as of December 31 $ 270,061,337 $ 283,629,566 $ 297,351,518
============== ============== ==============
<FN>
See notes to financial statements.
78
5
STATEMENT OF CASH FLOWS
TILDEN MINING COMPANY (A JOINT VENTURE)
Year Ended December 31
1993 1992 1991
-------------- ------------- --------------
OPERATING ACTIVITIES
Costs and expenses charged to associates $(110,228,087) $(77,177,520) $ (40,290,245)
Adjustments to reconcile costs and
expenses charged to associates to
net cash from (used) in operations:
Depreciation 13,547,942 13,699,766 14,185,955
Other ( 32,736) (125,819) (111,658)
Loss (gain) on sale of assets (143,796) 2,395 (371,569)
Changes in operating assets
(increase) decrease
Accounts receivable -0- 167,777 (167,777)
Receivable from associates 79,319 (223,451) (10,666)
Inventories 296,501 (1,875,134) 2,986,864
Changes in operating liabilities
increase (decrease)
Payable to The Cleveland-Cliffs
Iron Company 2,409,719 448,380 (737,783)
Payable to associates 2,777 (62,099) (7,709,604)
Payables and accrued expenses 351,103 517,955 (607,881)
-------------- ------------- --------------
Total changes in operating assets
and liabilities 3,139,419 (1,026,572) (6,246,847)
-------------- ------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (93,717,258) (64,627,750) (32,834,364)
INVESTING ACTIVITIES
Proceeds from sale of equipment 164,083 19,790 638,639
-------------- ------------- --------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 164,083 19,790 638,639
FINANCING ACTIVITIES
Lease payments -0- -0- (516,485)
Associates' contributions 93,663,838 64,540,468 32,797,092
Other (9,912) (6,555) (3,142)
-------------- ------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 93,653,926 64,533,913 32,277,465
-------------- ------------- --------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 100,751 (74,047) 81,740
Cash and cash equivalents at
beginning of year 15,574 89,621 7,881
-------------- ------------- --------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 116,325 $ 15,574 $ 89,621
============== ============ ==============
<FN>
See notes to financial statements.
79
6
NOTES TO FINANCIAL STATEMENTS
TILDEN MINING COMPANY (A JOINT VENTURE)
NOTE A-SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENTS: The financial statements have been prepared
principally for use by the associates (see Note B) in recording their
respective interests in the accounts of the Tilden Mining Company (a
joint venture) ("Venture"). Since the Venture does not generate
revenue, no provision is made for income taxes as the Venture's
costs and expenses charged to the associates are included in the
financial statements of each associate based upon defined allocation
percentages.
CASH EQUIVALENTS: The Venture considers investments in highly liquid
debt instruments with an initial maturity of three months or less to
be cash equivalents.
INVENTORIES: Iron ore concentrates are stated at average cost of
production, exclusive of depreciation and development. Supplies and
fluxstone are stated at the lower of average cost or market.
PROPERTIES AND DEPRECIATION: Property is stated on the basis of
cost and is depreciated over the estimated useful life,
principally by the straight-line method. Depreciation commences when
assets are placed in service.
EXPLORATION, RESEARCH AND DEVELOPMENT COSTS: Exploration,
research and continuing mine development costs are charged to
operations as incurred.
ADVANCE ADJUSTMENTS: Advance adjustments arise from differences in
monthly contributions and actual cost allocations.
WORKING CAPITAL ADJUSTMENT: The Venture agreement as revised by the
Tilden Mine Joint Venture Amendatory Agreement ("Amendatory
Agreement") dated January 1, 1984, provides for the adjustment of
defined working capital to zero at the end of each month through
charges or credits to the Associates' Account.
NOTE B-ORGANIZATION
The Tilden Joint Venture was formed in 1971 and began original operation of the Tilden mine facility in 1974.
The Tilden Joint Venture Agreement, as amended by the Amendatory Agreement, provides that the associates'
investment will be maintained in accordance with their ownership. Ownership percentages at December 31, 1993 and
1992 were as follows:
Tilden Iron Ore Partnership ("TIOP") 64%
J & L - Cliffs Ore Partnership ("JCOP") 36
-----
100%
=====
80
7
NOTES TO FINANCIAL STATEMENTS - Continued
TILDEN MINING COMPANY (A JOINT VENTURE)
NOTE B-ORGANIZATION-Continued
Ownership percentages of TIOP and JCOP as of December 31, 1993 and 1992 were as follows:
TIOP:
Cannelton Iron Ore Company 46.875%
Cliffs TIOP, Inc. 37.500
Stelco Coal Company 15.625
--------
100.000%
========
JCOP:
Cliffs Tilden, Inc. 62.500%
Cleveland-Cliffs Ore Corporation 37.500
--------
100.000%
========
Cliffs TIOP, Inc., Cliffs Tilden, Inc. and Cleveland-Cliffs Ore
Corporation are wholly-owned subsidiaries of The Cleveland-Cliffs
Iron Company ("Cleveland- Cliffs"). The Cleveland-Cliffs Iron
Company is a wholly-owned subsidiary of Cleveland-Cliffs Inc.
Cleveland-Cliffs is the manager of the Venture, TIOP and JCOP.
Cannelton Iron Ore Company ("Cannelton") is a wholly-owned
subsidiary of Algoma Steel Inc. ("Algoma").
Under the terms of the Venture agreement, the associates are
responsible with respect to obligations of the Venture only
severally in their respective ownership percentages. TIOP separately
entered into financing arrangements which are secured by a lien on
its share of the Venture's facilities and production therefrom.
In January, 1991, Cannelton defaulted on its obligation to fund its
share of the Tilden Mine production costs, and cured its default in
February, 1991. During the period of default, Cleveland-Cliffs
accelerated its share of funding and production in order to
maintain the scheduled production rate. In February, 1991, Algoma
sought and obtained protection from creditors under the Canadian
Companies' Creditor's Arrangement Act.
In January, 1992, Algoma filed its Plan of Arrangement Under the
Companies' Creditor's Arrangement Act (Canada) and the Business
Corporation Act (Ontario) in the Ontario Court of Justice, covering
its restructuring plan. The Plan was approved by the Court on April
16, 1992 and on June 5, 1992, Algoma emerged from Canadian
reorganization proceedings. Cannelton is continuing to fund its share
of the Venture's costs which is guaranteed by Algoma.
81
8
NOTES TO FINANCIAL STATEMENTS - Continued
TILDEN MINING COMPANY (A JOINT VENTURE)
NOTE B-ORGANIZATION-Continued
In February, 1994, Cleveland-Cliffs expects to reach agreement in
principle with Algoma and Stelco Inc. ("Stelco") to restructure and
simplify the operation of the Tilden Mine effective January 1,
1994. The principal terms of the new agreement are (1) the
participants' tonnage entitlement and cost-sharing will be based on
a 6.0 million ton target normal production level instead of the
previous 4.0 million ton base production level, (2) Cleveland-Cliffs'
interest in and responsibility for cost obligations of Tilden
Magnetite Partnership ("TMP") increases from 33.33% to 40.0% with
corresponding decreases for Algoma (from 50% to 45%) and for Stelco
(from 16.67% to 15%), (3) a partner may take additional production
with certain fees paid to the Partnership, (4) TMP will pay
an increased royalty to Cleveland-Cliffs, and (5) the Venture
and TMP will be merged into one entity. The agreement is not
expected to have a significant financial effect on the Tilden
Mine or the participants. The new Tilden arrangements reflect an
underlying plan of operating improvements and will allow a
lengthening of the magnetite ore reserve life. Additional capital
and development expenditures are expected in connection with the
improvement plan.
NOTE C-OPERATIONS
The Amendatory Agreement permits associates to individually nominate
production levels different than their respective ownership shares.
Each associate is obligated for defined base costs in proportion to
ownership shares and incremental costs in proportion to nominated
production share. In addition, the Amendatory Agreement provides
for annual adjustments between the associates to equalize the
charge for incremental costs and to compensate for nomination by an
associate of production in excess of ownership share.
Effective January 1, 1988, the associates of the Venture entered
into various agreements with TMP, a partnership formed by the
partners in the Venture. Under these agreements TMP is entitled to
the use of certain of the Venture's mining equipment and
concentrating and pelletizing facilities and TMP agreed to bear
certain defined base costs associated with such equipment and
facilities. Also under these agreements, TMP processes hematite
ore for the Venture, with the incremental costs of such
production as defined in the agreements (including a defined capital
cost allowance) being charged to the Venture. Base costs as defined
in the agreements are borne by TMP by agreement with the Venture.
Cleveland-Cliffs is the manager of TMP.
During 1993 the Venture was charged $96.1 million (1992 - $63.2
million; 1991 - $26.4 million) by TMP for processing hematite ore.
The associates have a lease agreement with Cleveland-Cliffs, owner
of the mineral interest in the land on which hematite ore mining
activities have been conducted by the Venture, which provides for
royalty payments based on iron ore pellets produced. Effective
January 1, 1988, the associates of the Venture entered into a
sublease agreement with TMP to permit TMP to extract magnetite ore
with respect to such mineral interests.
82
9
NOTES TO FINANCIAL STATEMENTS - Continued
TILDEN MINING COMPANY (A JOINT VENTURE)
NOTE C-OPERATIONS-Continued
The labor contract covering TMP hourly employees expired on August
1, 1993. A six-year, no-strike agreement was reached with the United
Steelworkers of America after a six-week strike idled production
facilities.
The agreement follows the wage and signing bonus pattern of the
earlier settlements by major steel companies, granting higher
pension benefits during the six-year term, increasing vacation
time and incentive pay, and allowing certain work force
productivity gains. On-going employment costs per hour are expected
to rise approximately 10 percent by July 31, 1996. At that time,
the agreements can be reopened for limited economic and other
matters, subject to binding arbitration or conformity to certain
steel company contract changes.
NOTE D-COMMITMENTS
The Venture is obligated for the purchase of electric energy
requirements of the Venture through the Tilden Mine Power Contract
entered into with Wisconsin Electric Power Company ("Wisconsin
Electric"). The Tilden Mine Power Contract has a primary term of ten
years through 1997.
The associates, TMP and Wisconsin Electric entered into an
amendment to the Tilden Mine Power Contract and an Auxiliary Power
Purchase Contract. Under these agreements, TMP will bear the
entire base, or demand portion of the electric energy charge
assessed by Wisconsin Electric; TMP and the Venture will bear the
incremental portion of electric energy charges based on electric
power supplied for magnetite and hematite ore processing,
respectively; and TMP will be able to access certain excess
electric energy capacity as required by its operations. The minimum
annual payment under the amended Tilden Mine Power Contract to be
paid by TMP is $7.6 million for demand charges for the year 1994.
NOTE E-RETIREMENT BENEFITS
In accordance with agreements with TMP, pension, health care and life
insurance benefits are obligations of TMP.
NOTE F-PENDING LITIGATION
The Venture is periodically involved in litigation incidental to its
operations. Management believes that any pending litigation will not
result in a material liability in relation to the Venture's financial
statements.
83
10
TILDEN MINING COMPANY
Schedule V - Property, Plant and Equipment
(Dollars in Millions)
Balance At Other Balance At
Beginning Additions Additions End
Classification Of Year At Cost Retirements (Deductions) Of Year
-------------- --------- --------- ----------- ------------ ----------
Year Ended December 31, 1993:
Plant and Equipment $ 551.3 $ -- $ 1.8 $ -- $ 549.5
Land 2.8 -- -- -- 2.8
-------- -------- -------- --------- --------
Totals $ 554.1 $ -- $ 1.8 $ -- $ 552.3
======== ======== ======== ========= ========
Year Ended December 31, 1992:
Plant and Equipment $ 551.5 $ -- $ 0.2 $ -- $ 551.3
Land 2.8 -- -- -- 2.8
-------- -------- -------- --------- --------
Totals $ 554.3 $ -- $ 0.2 $ -- $ 554.1
======== ======== ======== ========= ========
Year Ended December 31, 1991:
Plant and Equipment $ 565.1 $ -- $ 9.5 $ ( 4.1) $ 551.5
Land 2.8 -- -- -- 2.8
-------- -------- -------- --------- ---------
Totals $ 567.9 $ -- $ 9.5 $ ( 4.1) $ 554.3
======== ======== ======== ========= ========
------------------------------------------------------------------------------------------------------------------------------
Schedule VI - Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment
(Dollars in Millions)
Balance At Other Balance At
Beginning Additions Additions End
Classification Of Year At Cost Retirements (Deductions) Of Year
-------------- --------- --------- ----------- ------------ ----------
Year Ended December 31, 1993:
Plant and Equipment $ 270.5 $ 13.5 $ 1.8 $ -- $ 282.2
======== ======== ======== ========= ========
Year Ended December 31, 1992:
Plant and Equipment $ 256.9 $ 13.7 $ 0.1 $ -- $ 270.5
======== ======== ======== ========= ========
Year Ended December 31, 1991:
Plant and Equipment $ 256.0 $ 14.2 $ 9.1 $ ( 4.2) $ 256.9
======== ======== ======== ========= ========
<FN>
The annual provision for depreciation has been computed principally using rates ranging from 2% to 33%.
84
11
TILDEN MINING COMPANY
Schedule X - Supplementary Income Statement Information
(Dollars in Millions)
Charged to Costs and Expenses
Year Ended December 31:
1993 1992 1991
------- ------- -------
Maintenance and repairs $ 22.1 $ 14.5 $ 5.6
Taxes, other than payroll
and income taxes $ 1.9 $ 1.4 $ 0.8
Royalties $ 8.4 $ 5.7 $ 2.5
Amounts for depreciation and amortization of tangible
assets, preoperating costs and similar deferrals and
advertising costs are not presented because such amounts are
each less than 1% of total costs and expenses.
85
12
APPENDIX A - IMAGE AND GRAPHIC MATERIAL
---------------------------------------
Items 1 and 2 - Business and Properties (Map)
---------------------------------------------
The map is entitled, "Cleveland-Cliffs Inc and
Associated Companies Location of Iron Ore Operations". The
map has an outline of the United States and an outline of
Tasmania (Australia). Located specifically on the map are
arrows and dots representing the location of the properties
described in the Table on page 6 to this report.
Item 7 - Management's Discussion and Analysis of Financial
----------------------------------------------------------
Condition and Results of Operations (Graphs)
--------------------------------------------
Graph A
-------
This graph is captioned "Cumulative Earnings & Dividends".
The graph contains two lines depicting cumulative earnings
and cumulative dividends over the five-year period
1989-1993. Cumulative earnings were $60.6 million, $134.4
million, $188.2 million, $219.0 million and $273.6
million, respectively, for the years 1989-1993.
Cumulative dividends were $4.7 million, $14.0 million,
$73.1 million, $87.2 million, and $113.6 million,
respectively, for the years 1989-1993. The graph also
indicates that the cumulative payout ratio of dividends to
earnings was 8%, 10%, 39%, 40%, and 42%, respectively, for the
years 1989-1993.
Graph B
-------
This graph is captioned "Components of Invested Capital". The graph contains five bars depicting the components of
invested capital at December 31, 1989, 1990, 1991, 1992, and 1993, each bar reflecting Effectively Serviced Debt
and Shareholders' Equity, as follows:
Amount (In Millions) Percent
--------------------------------------------- ---------------------------------------------
Effectively Effectively
Serviced Shareholders' Serviced Shareholders'
December 31 Debt Equity Total Debt Equity Total
----------- ----------- ------------- ------ ---------- ------------- ------
1989 $93.4 $226.0 $319.4 29% 71% 100%
1990 82.4 290.8 373.2 22 78 100
1991 65.0 290.8 355.8 18 82 100
1992 92.1 269.6 361.7 26 74 100
1993 88.6 280.7 369.3 24 76 100
86